The settop box (STB) has always been a critical part of the video delivery solution. STBs enable the SP to deliver many revenue producing services including basic channel line ups, VOD, DVR, etc. Hence, they love them. STB are about 50% of an SP’s CapEx. Hence, they hate them. As everyone knew, and Cisco learned when they bought SA, there is constant downward price and margin pressure on STBs. Vendors such as Cisco, and now Arris, along with Samsung and others have yet to change the dialog away from “speed and feeds” and “price”.
Part of this arises from the “old days” where the STB vendor would not put engineering “pen-to-paper” until they had a signed contract for millions of units. Armed with this contract they would then beat the living daylights out of their semiconductor suppliers. I know; I was one of them. I felt the large STB vendors (SA and GI) looked upon this beat down as sport. They seemed to enjoy it. (See “side-bar” below)
Even back then I felt the STB vendors and their SP customers were missing something. They had a physical box the same size as the current PC that was situated, and visible, in living rooms throughout the world. I began looking at them as a Trojan horse.
Competition among service providers and vendors has spurred many innovations in the market. New entrants including Intel, Google and Apple as well as many startups have made forays in to this market. Yet with all the talk of cord cutting, OTT only solutions are not enough. Cisco’s Videoscape presented a story that was all encompassing. Unfortunately, it was only a story. Interactive TV and Apps on the TV continue to stutter. Surfing the web with a 0-9, up, down, left, right remote control falls far short of a good user experience. Social TV stutters as well. Who wants a Facebook window taking up valuable TV screen real estate? The industry has tried to address this in many ways. Yet, adding single purpose boxes such as Roku, Slingbox, etc. (All irritants to the SPs) became, among other things, a wiring nightmare for all but those consumers with structured wiring closets.
All of these problems are individually solvable and many efforts are underway to do just that. However, I’ve yet to see anyone, SP or vendor, figure out the real solution. I though Google had it when they bought Motorola, but was proven wrong with they sold the video part to Arris.
In Part II, I’ll elaborate on the solution that I believe if adopted by SPs will give them an economically attractive long term solution to capture and control the home. This solution is found at the turbulent intersection of technologies ranging from Video, Cloud, Mobile, SDN et al and addresses market and business realities, dynamics, and trends. I don’t mean to leave you in suspense but few will read longer post since we all have ADD.
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Side Bar (OK it’s not on the side)
In one meeting at the dominant STB at the time, I had brought a senior development engineer who was pitching his new component. This new component had features that were state-of-the-art. The STB vendor on the other hand had some basic requirements that started with “Two Bucks”. They had architected the box down to each component and had assigned a dollar value to each and every one. Every time the engineer went on about some secondary feature such as spurious free dynamic range, the Director of Engineering kept saying “Two Bucks”. After a few rounds of this I tried to change the conversation but the engineer kept pushing, what were now tertiary features. It literally took an under the table kick and the evil eye stare to get him to stop. The message was “give us the best for performance for two bucks”.